George Osborne suffered a significant double blow yesterday as ‘worrying’ figures suggested that the economic recovery is stalling.

The Office for National Statistics downgraded growth figures for both the second and third quarters of 2015.

At the same time, it emerged that the trade deficit – the difference between the value of Britain’s exports and imports – had widened to £8.7billion.

This week didn't look good for Chancellor George Osborne as growth forecasts were downgraded and both the deficit and borrowing were up

The news completed what economists called a ‘bad 24 hours’ for the Chancellor. On Tuesday, the ONS said borrowing for November was up by £1.3billion compared with the same month in 2014 – potentially blowing Mr Osborne’s targets for reducing the deficit off course.

He now faces a challenge to hit his key targets for both growth and getting the country’s finances back in the black.

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Yesterday’s figures showed that the economy expanded by 0.4 per cent in the third quarter of this year, less than the 0.5 per cent previously estimated.

The ONS reduced its estimates after the services sector – which accounts for well over 70 per cent of the economy – grew more slowly than thought. It also said the economy expanded by only 0.5 per cent in the second quarter, down from its previous estimate of 0.7 per cent.

Britain's economy has expanded for 11 quarters in a row and the Treasury today insisted growth remained strong as 2015 draws to a close

Experts said the figures showed the recovery is weaker and patchier than thought and predicted that the economy would expand by 2.2 per cent over the course of 2015. This would fall short of the 2.4 per cent target set by the Office for Budget Responsibility – the Treasury watchdog.

Ruth Miller, UK economist at Capital Economics, said the figures suggested the recovery was ‘running out of momentum’. She added: ‘The downward revision reflected weaker growth in the UK’s dominant services sector – which is perhaps a concerning sign for the sustainability of the recovery.’

Sluggish growth in the services sector – which includes shops, restaurants, hotels, accountants and lawyers – will give the Government particular cause for concern as it is seen as the engine of Britain’s economy. Monthly growth was just 0.1 per cent in October, following 0.5 per cent in September.

Simon French, of stockbrokers Panmure Gordon, said the latest downgrade to official growth forecasts underlined just how fragile the economy is.

Official data from the Office for National Statistics included two quarters of downgrades to rises in GDP as assessments of the size of the economy - including retail - were reviewed

He said the slowdown in the services sector was the most worrying aspect, adding: ‘It’s been a bad 24 hours for the Chancellor. It is the fourth of seven quarters where the ONS overestimated the strength of the economy.’

The economy also remains ‘unbalanced’, with Britain’s export market struggling and households spending more money on imported goods. The trade deficit was £8.7billion in the third quarter, up from £4.7billion the previous quarter.

A Treasury spokesman remained upbeat, saying: ‘The UK was the fastest growing economy in the G7 last year, we’re leading the pack with the US this year, we have a record high employment rate and the deficit is down.’